The following necessarily leaves alot of questions unanswered, because I can't write a book in response to you (but this comes close anyway). Instead, I'm just "peeling off one layer of the onion", so to speak. I'll have something to say about some of the concretes you mentioned, but I'm going to focus on principles.

Let me start by stating that I'm not a Libertarian. The view that the government is evil or a necessary evil is wrong. Consequently, I don't agree with economists or others who think that. A government that secures individual rights is _good_ - only a government that doesn't is bad. I agree with the founders view that the purpose of government is securing individual rights.

Next, I'd like to state what I consider to be "harm": violating somebody's rights, which means initiating physical force (or threatening it) against a person or his property. This can be called "political" harm.

Other types of harm are _moral_ issues, not political ones, and hence the government has no legitimate role in responding to them (or acting to prevent them). In fact, to do so is to cause political harm, to violate individual rights, because it cannot be done except by threatening or initiating physical force. That directly contradicts the purpose of government.

Regarding my claim that there are no examples of companies engaging in voluntary exchange causing harm to consumers, I'm basing this on several things: the above meaning of "harm", the history of several companies alleged to have done this, and the principle that voluntary exchange _cannot_ cause such harm.

A company causing harm in the political sense is not engaging in voluntary exchange - it is using physical force, e.g., as with fraud. As such, it doesn't count as an example. Such companies can be handled with normal criminal law - anti-trust isn't necessary.

The history of the famous anti-trust cases I have looked into shows me that the harm was perpetrated by the _government_ against the accused company, and the accused company was guilty of nothing but excellence. The case of Alcoa is the single best example of this, but I've read similar things about Standard Oil and a handful of others.

Voluntary exchange between two parties may cause _disappointment_ to some third party, it may frustrate their desires, it may even cause that third party to go out of business (in the case of large numbers of such exchanges in a free market summing in favor of one company and against another). None of these, however, are legitimate political issues since they don't cause harm in the political sense.

Your (and often my) bitching about Microsoft products is in response to that category of non-political harm (perceived harm, anyway). We don't like it, but the government has no business doing something about it.

Now, about some of the concretes you mentioned. The "barriers to entry" problem is to be expected. Some markets simply require huge amounts of capital to get into, and somebody _without_ such capital has no right to cry foul because he can't get in. Those who do have the capital, have it because they already have a long track record of success in other markets, and hence people are willing to invest in them. Those who don't are in that situation because they don't have that track record. Customers who want what is produced in these markets can _wish_ there were more choices, but none of them can legitimately claim that because there aren't, somebody is doing something bad.

Predatory price wars - this is one of the specifc fallacies exposed by the economists I mentioned. The main thing to keep in mind here is that a successful business manager would have to be almost literally _crazy_ to try this - and his boss ought to fire him if he tries (and the board of directors should fire _him_ if he doesn't).
The premise of this fallacy is that a company has large sums of money due to good profitability, and then decides on purpose to stop making a profit and take losses in order to drive out competitors, and thus be free to charge prices free of market pressures. Even setting aside the "crazy" claim above, this cannot succeed.
Even if it drives out competitors without going bankrupt first, the instant it tried to recoup the losses by charging outrageous prices, two things would happen. First, most of its customers will become extremely disgruntled, because they will see that they are being gouged. Second, competitors who can undercut that price and still make a profit will enter the market, attracting the mad customers, and forcing the gouger to lower its prices or go out of business. That process would continue until prices settle at the lowest levels that sustain the market. The end result of that is necessarily that the crazy company will not have recouped its losses, and its reputation will have been ruinously damaged.

Note that charging _lower_ prices but still making a profit can drive out competitors who can't make a profit at that price, but that is perfectly legitimate.

Lastly, my main objection to allegations that anti-trust remedies like breaking up a company are beneficial on net balance is that they commit a major economic fallacy. These allegations pay attention to what can be seen (the wealth produced in the aftermath), but not to what _cannot_ be seen: the wealth that did not come into existence because the original company was broken up.

It is _understandable_ that people would do this, since nobody can measure what doesn't exist, but it is a mistake, and that mistake invalidates the allegations of benefit.

I apologize if I haven't addressed something you think needed to be. If I have, I'm sure you'll let me know. ;-)

Mark Peters

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